Correlation Between Serstech and Novotek AB
Can any of the company-specific risk be diversified away by investing in both Serstech and Novotek AB at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Serstech and Novotek AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Serstech AB and Novotek AB, you can compare the effects of market volatilities on Serstech and Novotek AB and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Serstech with a short position of Novotek AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Serstech and Novotek AB.
Diversification Opportunities for Serstech and Novotek AB
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Serstech and Novotek is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Serstech AB and Novotek AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novotek AB and Serstech is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Serstech AB are associated (or correlated) with Novotek AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novotek AB has no effect on the direction of Serstech i.e., Serstech and Novotek AB go up and down completely randomly.
Pair Corralation between Serstech and Novotek AB
Assuming the 90 days trading horizon Serstech is expected to generate 3.06 times less return on investment than Novotek AB. In addition to that, Serstech is 1.43 times more volatile than Novotek AB. It trades about 0.06 of its total potential returns per unit of risk. Novotek AB is currently generating about 0.25 per unit of volatility. If you would invest 5,640 in Novotek AB on August 30, 2024 and sell it today you would earn a total of 960.00 from holding Novotek AB or generate 17.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Serstech AB vs. Novotek AB
Performance |
| Timeline |
| Serstech AB |
| Novotek AB |
Serstech and Novotek AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Serstech and Novotek AB
The main advantage of trading using opposite Serstech and Novotek AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Serstech position performs unexpectedly, Novotek AB can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Novotek AB will offset losses from the drop in Novotek AB's long position.| Serstech vs. Enzymatica publ AB | Serstech vs. Polygiene AB | Serstech vs. Sprint Bioscience AB | Serstech vs. XMReality AB |
| Novotek AB vs. Softronic AB | Novotek AB vs. FormPipe Software AB | Novotek AB vs. Dedicare AB | Novotek AB vs. NOTE AB |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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